Z94.14 - Operations & Inventory Planning & Control

The Industrial Engineering terminology related to production control is rife with acronyms. Every time production control personnel turn around, there is a new system with a new acronym. The proliferation of acronyms occurred with the advent of computers, especially personal computers, and the associated software. The industry is now constantly creating new production control software, creating a new name, a new term, a new acronym, and marketing the software as a new production control concept. Therefore, it is impossible and probably inappropriate to document all the new acronyms or terms appearing in the market place. The acronyms and terms presented herein are believed to be generic, not tied to specific software.

Production control is one of the manufacturing system functions that evolved from the plant floor. Many production control personnel assumed those positions without formal training. As such, each manufacturing facility created its own terms or definitions of terms to suit its own needs. Hence, there are many different and acceptable definitions for many terms. Many of the terms presented herein have multiple definitions. The given definition(s) are intended to be as general as possible while still printing out the key technical points.

As are all industrial engineering specialties, production control is constantly evolving. We have seen the eras of capacity planning, shop floor control, MRP, and JIT as well as many other technologies. Interestingly, these eras of a specific technology do not disappear. Rather they are simply added to, providing more and more capabilities for the production control person. As such, the number of terms defined have increased substantially. In addition, the definitions in many cases have changed or been expanded to accommodate the new technologies.

Where is production planning and control technology going? Many will argue that it is becoming much more data and information systems oriented. With computer proliferation on the production floor, real-time data are a reality. The capability of knowing where everything is and what everyone is doing now is possible if not a reality. Unfortunately the result is a data avalanche which in many instances is unmanageable. Therefore, it can be argued that production planning and control is the gathering of the right information at the right time to make decisions right now!

In addition, many production planning and control people will argue that companies are now seeing their function for what it really is, the nervous system running the entire facility. With that as a concept, many companies are providing the production control people much more comprehensive authority and forcing non-production control people to learn more about production control. Hence, there is an ever growing need for non-production control and production control people to know and utilize a common set of accepted terminology.

Those responsible for this terminology are:

Chairman

Timothy J. Greene, Ph.D.
Professor and Department Head
Department of Industrial Engineering and
Management, Oklahoma State University

DEFINITIONS

ABC CLASSIFICATION. Classification of the items in an inventory in decreasing order of annual dollar volume. This array is then split into three or more classes, called A, B, and C, etc. Class A contains the items with the highest annual dollar volume and receives the most attention. The medium Class B receives less attention, and Class C, which contains the low-dollar volume items, is controlled routinely. The ABC principle is that effort saved through relaxed controls on low-value items will be applied to reduce inventories of high-value items. Syn: distribution by value.

ABC INVENTORY CONTROL. An inventory control approach based on ABC classification.

ACCESSORY. A choice or feature offered to a customer for customizing the end product. In many companies, this term means that the choice does not have to be specified prior to shipment but could, in fact, be added at a later date. In other companies, however, this choice must be made prior to shipment. (See ATTACHMENT, OPTION.)

ACTION MESSAGE. An output of an MRP system that identifies the need for and the type of action to be taken to correct a current or a potential material coverage problem. Examples of action messages are Release Order, Reschedule In, Reschedule Out, Cancel, etc. Syn: exception message.

AGGREGATE INVENTORY. The sum of the inventory levels for individual items. For example, the aggregate finished goods inventory would be made up of one half the sum of all the lot sizes plus the sum of all of the safety stocks plus any anticipation inventory plus transportation inventory.

ALLOCATION. (1) In an MRP system, an allocated item is one for which a picking order has been released to the stock room but not yet sent out of the stock room. It is an uncashed stock room requisition. (2) A process used to distribute material in short supply. (See RESERVATION.)

ANTICIPATED DELAY REPORT. A regular report, normally issued by both manufacturing and purchasing to the material planning function, regarding jobs or purchase orders which will not be completed on time, why not, and when they will be completed. This is one essential ingredient of a closed-loop MRP system.

ASSEMBLE-TO-ORDER PRODUCT. End items assembled after receipt of a customer order where options or other subassemblies are stocked prior to order arrival. (See MAKE-TO-ORDER PRODUCT.)

ASSEMBLY LEAD TIME. (See LEAD TIME.)

ASSEMBLY LINE. A manual or automated serial facility where the product is progressively and repetitively manufactured. An assembly line process can be divided into elemental tasks, each with a specified time requirement per unit of product and a sequence relationship with the other tasks. (See LINE BALANCING.)

ATTACHMENT. A choice or feature offered to customers for customizing the end product. In many companies, this term means that the choice, although not mandatory, must be selected prior to the final assembly schedule. In other companies, however, the choice need not be made at that time. (See ACCESSORY, OPTION.)

AUTOMATIC RESCHEDULING. Allowing the computer to automatically change due dates on scheduled receipts when it detects that due dates and required dates are out of phase.

AVAILABLE INVENTORY. The on-hand balance of an item minus outstanding allocations and "usual" quantities held for quality problems.

AVAILABLE TO PROMISE. The portion of a company's inventory or planned production uncommitted to customer's orders. This figure is frequently calculated from the master production schedule and is maintained as a tool for order promising.